This **ti 84 online calculator** module provides a quick and accurate way to determine the Compound Annual Growth Rate (CAGR) of an investment, which is a key measure of an investment’s performance over multiple periods.
CAGR Calculator (ti 84 online calculator)
Calculation Steps
Click 'Calculate' to see the detailed steps.
CAGR Formula: ti 84 online calculator
Where:
- Ending Value (EV): The investment’s final value, including reinvested dividends.
- Starting Value (SV): The initial investment amount.
- Number of Years (N): The investment period.
Variables Explanation
Understanding the inputs is crucial for accurate calculation:
- Starting Value (SV): The market value of the investment at the start of the period. Must be greater than zero.
- Ending Value (EV): The liquidation value of the investment at the end of the period.
- Number of Years (N): The duration in years. For non-integer periods, use a decimal value (e.g., 18 months = 1.5 years). Must be positive.
Related Calculators
You may also be interested in these related financial tools:
- Net Present Value (NPV) Calculator
- Internal Rate of Return (IRR) Calculator
- Return on Investment (ROI) Calculator
- Future Value of an Annuity Calculator
What is Compound Annual Growth Rate (CAGR)?
The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period longer than one year. It smooths out volatility and allows you to compare the performance of different investments on an apples-to-apples basis. It represents the hypothetical, steady rate at which your investment would have grown if it had compounded at the same rate every year.
CAGR is widely used in finance because it provides a more realistic picture of return than simple annual return. Since it factors in the effects of compounding, it is the standard metric used by analysts and investors when assessing historical growth trends in revenue, market share, costs, and other key business metrics.
While this calculation is straightforward on a dedicated financial calculator like the TI-84, our online calculator provides immediate, error-free results, along with detailed step-by-step documentation, making it an excellent replacement for the handheld device’s complex inputs.
How to Calculate CAGR (Example)
Let’s use the inputs: Starting Value ($50,000), Ending Value ($75,000), over 4 years.
- Step 1: Divide Ending Value by Starting Value. $75,000 / $50,000 = 1.5
- Step 2: Raise the result to the power of one divided by the number of years. $1.5^{(1/4)} \approx 1.5^{0.25} \approx 1.10668$
- Step 3: Subtract one from the result. $1.10668 – 1 = 0.10668$
- Step 4: Multiply by 100 to get the percentage rate. $0.10668 \times 100 \approx 10.67\%$
- Result: The Compound Annual Growth Rate (CAGR) is approximately 10.67%.
Frequently Asked Questions (FAQ)
Is CAGR the same as ROI?
No. ROI (Return on Investment) is a simple return rate over a period. CAGR is an annualized, smoothed rate of return that accounts for compounding over multiple years.
Why is my CAGR negative?
A negative CAGR indicates that the Ending Value of your investment is lower than your Starting Value, meaning the investment experienced an overall loss during the period.
Can I use months instead of years for N?
Yes, but you must convert months to a decimal year equivalent. For example, 30 months should be input as 2.5 years (30 / 12 = 2.5). The result will always be the annual rate.
What is the main limitation of CAGR?
CAGR assumes growth at a steady rate, ignoring the actual volatility (ups and downs) that occurred between the starting and ending points. It is a calculated hypothetical rate, not the true year-over-year performance.